Reassessment initiation and referable question of law: tribunal declined to state the case where the issue turned on facts.

A dispute over reassessment initiation did not require a reference under section 256(1) because the proposed question depended on factual findings rather than a referable question of law. The Tribunal applied the principle that intermediary steps in the reference process do not amount to final adjudication, and relied on the Supreme Court view in CIT v. Lakhiram Ramdas that no question of law arises where reassessment was found lacking factual foundation. On that basis, the Tribunal declined to state the case and rejected the reference application.

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Issues: Whether the Tribunal was required to state the case under section 256(1) of the Income-tax Act, 1961 on the question whether the reassessment proceedings were validly initiated.

Analysis: The proceeding under section 256(1) remains incomplete until the statement of case is finally drawn up and referred to the High Court, and intermediary steps taken before that stage do not amount to a final adjudication foreclosing reconsideration. On the facts, the Tribunal held that the controversy was covered by the Supreme Court decision in CIT v. Lakhiram Ramdas, where it was ruled that no question of law arose from a finding that reassessment initiation lacked the necessary factual foundation. Applying that principle, the Tribunal concluded that the proposed question did not disclose a referable question of law but turned on facts already found.

Conclusion: The Tribunal was not bound to state the case, and the reference application failed.

Ratio Decidendi: Where the dispute about reassessment initiation is concluded on facts and does not give rise to a referable question of law, the Tribunal may decline to state the case under section 256(1) of the Income-tax Act, 1961.

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